Epistemic status: Some fundamental errors but worth leaving up
I think the error with this piece is that it is a hammer looking for a nail, rather than the reverse. Austin makes the point well here. Rather than saying "how to institute Futarchy," I guess it should say "how do we solve problems people already have"
Futarchy is a decision-making system where prediction markets are used to make decisions on what actions to take. You agree on some some kind of metric that you care about, and then predict how decisions will affect that metric. Futarchy generally implies a deterministic system, though this proposal is more about ironing the kinks out of the system so it could initially be advisory initially.
We can imagine running decision markets on a Manifund regrantor. Manifund is a new regranting org. Individuals get regranting budgets and then publicly allocate them. I guess that if they use their budget well they can argue to be given more.
Manifund is a good test bed for Futarchy for three reasons:
So, it occurred to me that this would be a cool thing to exist, so this is me trying badly to do it. I don't pretend I'm going to do a good job here. I'm going to lay out what seems like the way I would do it, and then if, you know, please correct me,
For each grant proposal you want a prediction market with two sets of options, either 4 options or 2 continuous options in a single market:
The regrantor needs to prioritise grant opportunities above some funding bar. The key questions is "what's the value add". Here, the answer is the difference in the metric if it happens and if it doesn't. Perhaps divide by the size of the grant.
So, this requires that we have a clear metric, which is going to be a problem. Here are three suggested metrics:
I reserve the right to edit these.
Issues I buy
The issues I don't buy
To me it seems more like GiveDirectly than GiveWell. Something that is less effective (due to the benefits of both secrecy and an org that manages decisions) but can be scaled much more. I'm doubtful that a futarchy regrantor would scale soon, but equally I sense one day that all regranting will happen like this.
It will be attractive to a certain kind of donor. I sense a certain kind of donor (often crypto) will find the idea very attractive. And since large crypto donors are comparably prevalent (and with a bull run, will be even more so), there seems reason for more so.
It would be good to test futarchy. I would like to understand why we haven't seen more futarchy. What are the kinks that need ironing out? I think there is value in testing in a real world situation. Maybe there are learnings transferrable to other orgs.
I dictated this and spent about an hour editing it. Please correct errors or make suggestions. I don't currently intend to put this into place, so if you want to, do! Please let me know.
It doesn't seem hard to remove the downside by saying there will be a committee who will veto markets if they seem obviously manipulated.
People's intuition seems to be that there should be 2 separate markets - "If A" and "If not A". To me this seems wrong. If you make a profit on such a market you need a way to take the money out of the market. I can go into the details in the comments, but this requires a "will A happen" market. And so you might as well have all 4 options as a single market.
A criticism here is "5 years, that's ages" but it seems normal grantmaking operates on this timescale also.
One idea for the metric would be to elicit pairwise comparison between projects continuously, and derive ELO rating from it. The biggest advantage of this system is that it requires much less time to compare two projects rather then give some form of rating to it like: X reduction of p(Doom)
Good proposal! I agree that this is a great opportunity to try out some ideas in this space.Another proposal for the metric: The regrantor will judge in 5 years whether they are happy that they funded this project. This has a simple binary resolution criterium and aligns the incentives of the market nicely with the regrantor.
I am strongly don't buy
Grammar: delete "am"
If the market are
Grammar: "market is" or "markets are"
I made some quick changes to the Futarchy tag. Please look over and correct them. https://www.lesswrong.com/tag/futarchy